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Looking for another stock tip

By Patrick follow Patrick   2017 Feb 24, 10:20am 6,195 views   28 comments   watch   nsfw   quote   share    


It's a down day in the market and I've got some cash in a rollover IRA since I sold RYKKY at a small profit, deciding I didn't really even know why I had bought it.

The sweet spot I'm looking for is:

  • p/e under 20
  • consistently growing revenue year over year
  • relatively small market cap, like under $2B
  • company does something or makes something I can easily understand
  • pays a dividend, no matter how small

I'll try some stock screeners, but would be grateful for any ideas you all have.

#investing

1   NuttBoxer   ignore (2)   2017 Feb 24, 11:14am     ↓ dislike (0)   quote   flag      

Anything you plan to sell in a hurry. Seriously, I wouldn't buy any top unless I was going to offload it well before the next dip.

2   someone else   ignore (0)   2017 Feb 24, 11:18am     ↓ dislike (0)   quote   flag      

I don't care much about the overall state of the market.

Just looking for a company so solid that it will continue to grow no matter what the market does.

3   a   ignore (0)   2017 Feb 25, 3:55pm     ↓ dislike (0)   quote   flag      

If you feel dicey check out an oil and gas royalty trust like PBT or NDRO. You get decent monthly income, percentage depletion (15%) deduction on your taxes, and if you hold onto it until the next oil boom you can make a decent return. Just watch out for low liquidity.

4   Shaman   ignore (2)   2017 Feb 25, 4:47pm     ↓ dislike (0)   quote   flag      

General Motors is good for long term. They have a low P/E about 6, a lower stock value currently on a dip, and exciting products coming out soon. I'm especially interested in the Bolt which is a mid size electric vehicle they're adapting for autonomous driving. I figure it will be a cheaper entry vehicle for people who can't afford $70k for a basic Tesla.
Auto driving is going to be huge. People are going to want it, and the Bolt is priced reasonably.

5   someone else   ignore (0)   2017 Feb 25, 4:57pm     ↓ dislike (0)   quote   flag      

Holy cow, that is an amazingly low p/e. And a 4% dividend.

May be worth it just for the dividend.

6   anonymous   ignore (null)   2017 Feb 25, 5:10pm     ↓ dislike (0)   quote   flag      

Quigley says

I'm especially interested in the Bolt which is a mid size electric vehicle they're adapting for autonomous driving.

Based on your comment, I did some research on the Bolt. I'm impressed...238 mile range. I'm really excited about the EV movement. I just hope the momentum continues

7   BayArea   ignore (1)   2017 Feb 25, 5:30pm     ↓ dislike (0)   quote   flag      

I'm in the same boat Patrick.

Was going to load up on more gold, silver, and treasury bonds but would prefer another bulletproof equity.

LMK if you jump into GM, I like it below 30.

8   someone else   ignore (0)   2017 Feb 25, 5:32pm     ↓ dislike (0)   quote   flag      

I've pinged a financially savvy friend about GM.

Maybe he will have some good reason I should not buy GM. Otherwise, I plan to buy at least a little.

9   BayArea   ignore (1)   2017 Feb 25, 5:43pm     ↓ dislike (0)   quote   flag      

Be careful about getting too romanticized by the allure of low P/E.

Look at Tesla's P/E ratio of -40, and look what their stock has been doing (I bought at 190 and sold at 230 and kicking myself ugh)

10   FortWayne   ignore (4)   2017 Feb 25, 7:02pm     ↓ dislike (0)   quote   flag      

rando says

I've pinged a financially savvy friend about GM.

Maybe he will have some good reason I should not buy GM. Otherwise, I plan to buy at least a little.

please keep us posted, I'm interested too.

11   anonymous   ignore (null)   2017 Feb 25, 8:43pm     ↓ dislike (0)   quote   flag      

NVDA still good.

if you want risk/reward then check out DRYS. it can bottom out or go up exponentially in a day or two. it just pegged +200% a few weeks ago, and has fallen back since. TOTAL SCAM!

12   someone else   ignore (0)   2017 Feb 25, 9:10pm     ↓ dislike (0)   quote   flag      

Holy crap, I have never seen such a fucked up profile before in any stock:

EPS of -$464 per share?

1 year target estimate of $4,200? From $2 even.

Wonder what is going on there.

13   someone else   ignore (0)   2017 Feb 25, 9:17pm     ↓ dislike (0)   quote   flag      

Here's my friend's reply about GM:

I have been thinking about it as well.

I haven’t invested because their additional investment in the business (more capital expenditures) is massive and greater than their earnings.

In 2016, cash flow in is 16.5bil from operations. Then they spent 29bil on new investments. I guess more tools, more factories, more workers, etc…

Then they had to borrow 22bil dollars.

That’s the huge problem with car business. You makes some profit and then have to invest that + more into new models for next year.

It has been a crappy business to be for the last 50 years. National pride is at stake, every countries wants a strong car manufacturing business, and governments gets involved and funding with cheap loans in many cases.

Berkshire owns some shares, so maybe there’s a good way to rationalise investment in GM. I will read more and think about it.

14   Shaman   ignore (2)   2017 Feb 26, 12:04pm     ↓ dislike (0)   quote   flag      

Reinvestment of funds doesn't make for great dividends,but as Apple proved, it can really make for a strong company and healthy stock prices! I'm mostly impressed with the product GM is making lately. The Volt was kind of a dud for sales, priced a bit too high and only four seats killed it for family car status. Whoops. But the Bolt should be the next ubiquitous vehicle. Expect it to replace the Prius, which are absolutely everywhere. I've seen a lot of Tesla vehicles on the road recently. That means to me that people want the features and are willing to pay big money for them. If they can get approx the same for half price, much greater market share. I like GM for this product because they took a risk with the Volt and even tho it didn't pay off, they learned a lot which should contribute to a much better product second time around.
Just like Toyota and hybrids, after ten years or so of making them they are really good with that drive. I felt really comfortable buying a Camry hybrid because the bugs are definitely worked out.

15   anonymous   ignore (null)   2017 Feb 26, 3:37pm     ↓ dislike (0)   quote   flag      

rando says

government gets involved and funding with cheap loans in many cases.

Personally, I'd be a bit nervous about investing in GM given that the cheap credit may be coming to an end. There are a lot of articles recently about the subprime auto loan situation in this country and how it's going to pop. That obviously wouldn't bode well for any car company that sells in the US, but what do I know.

16   zzyzzx   ignore (2)   2017 Feb 26, 3:48pm     ↓ dislike (0)   quote   flag      

just any guy says

There are a lot of articles recently about the subprime auto loan situation in this country and how it's going to pop.

That's pretty much always been the case. And yes I would know, I used to work at Wells Fargo's sub-prime auto loan division.

17   someone else   ignore (0)   2017 Feb 26, 4:30pm     ↓ dislike (0)   quote   flag      

More from my financial friend:

I read portions of GM 10K last night. It seems pretty good.

The cash flow problems I mentioned are not true. Their negative cash flow is caused by GM Finance which means they are loaning out more money. GM Finance is actually a pretty good business.

They used own Ally Finance and spun it off after the financial crisis. They then developed GM Finance to recapture a lot of the auto loan business.

OK, definitely going to buy a bit of GM tomorrow.

18   someone else   ignore (0)   2017 Feb 26, 4:56pm     ↓ dislike (0)   quote   flag      

zzyzzx says

I used to work at Wells Fargo's sub-prime auto loan division.

Hey @zzyzzx we have Wells Fargo in common. I was a contractor for a year in the small business loans group in SF. Hated it, but the pay was good.

20   zzyzzx   ignore (2)   2017 Feb 27, 7:16am     ↓ dislike (0)   quote   flag      

rando says

Hated it, but the pay was good.

The division that I used to work for wouldn't hire anyone unless they were currently unemployed or working for below market wages. In other words, the pay sucked, but that was for everyone in the office. The benefits used to be great, until they cut them out. I'm specifically referring to the previous 401K matching ($2.50 on your dollar), savings account that paid 6%, and the defined benefit pension plan that they did away with a couple of months before I would have been minimally vested in it.

21   anonymous   ignore (null)   2017 Feb 27, 9:46am     ↓ dislike (0)   quote   flag      

here is one that may need till '18 to "wake up" - KR

22   NuttBoxer   ignore (2)   2017 Feb 27, 9:46am     ↓ dislike (0)   quote   flag      

rando says

Just looking for a company so solid that it will continue to grow no matter what the market does.

Look at 2008 and see if any stock rose when the market crashed. Stocks cannot operate independent of their control, regardless of the companies bottom line. Buy on the cheap after the next crash.

23   someone else   ignore (0)   2017 Feb 27, 11:38am     ↓ dislike (0)   quote   flag      

Bought some GM. Even if it doesn't appreciate, that 4% dividend would be pretty sweet if they keep it up.

NuttBoxer says

Look at 2008 and see if any stock rose when the market crashed.

Here are companies that had gains for the 52 weeks prior to 3/6/09, ticker and price change.

EBS 188.97
COCO 117.6
MYGN 115.12
SQNM 111.42
ESI 101.21
CRD.B 79.4
SXCI 76.39
VRTX 72.91
OSIR 67.38
FDO 61.49
AVAV 58.9
THOR 55.33
OCN 54.4
FCFS 50.64
GMCR 50.02
CECO 48.89
DLTR 48.46
MNRO 46
PEGA 44.56
BECN 42.63
BWLD 42.55
CENT 41.57
CRXLY 35.94
AZO 35.39
RGLD 34.6
MTZ 31.84
SYNA 30.16
OCR 29.94
EMS 29.65
USMO 28.36
ALGT 27.68
SHEN 27.65
LNCE 27.37
NTCT 26.75
JJSF 26.34
EW 26.33
APEI 26.11
DMND 25.66
ACOR 25.28
LINC 25.14
THFF 24.97
CACC 24.08
PNRA 23.44
SQM 23.14
GVA 23.1
QCOR 22.44
TTEK 22.23
... too many more to paste (damn comment limit!)

24   BayArea   ignore (1)   2017 Mar 1, 2:25pm     ↓ dislike (0)   quote   flag      

Patrick, curious what your entry point was for GM? The automotive credit crisis has so far kept me out. It would be interesting if anyone had data on which auto manufacturers have the most credit heavy purchases (normalized to something that would allow us to compare across all manufacturers)

After yesterday's speech, I lost my shirt on treasuries (I expect them to bounce back the remainder of the week). But gold/silver and gold/silver mining was all green today surprisingly.

25   missing   ignore (1)   2017 Mar 1, 3:01pm     ↓ dislike (0)   quote   flag      

Stock picking based on fundamentals is a waste of time for retail investors.

I'd suggest to focus on ETF's and, if you like dividends, on closed end funds and BDC's. EWZ looks good - momentum + value. RSX - I'm buying more if it drops to the 18's. UGA is attractive at 27 and below; it does not suffer from contango like the oil funds.

You missed the really big trade from 2 weeks ago - long March VIX call options or March long - April short VIX futures spread. The March Vix future was below 12.5 with something like 26 days to expiration and VVIX was in the 70's. That's the closest it gets to free money.

26   someone else   ignore (0)   2017 Mar 1, 3:42pm     ↓ dislike (0)   quote   flag      

@BayArea I bought in to GM at 37.22/share

FP says

Stock picking based on fundamentals is a waste of time for retail investors.

I disagree. The few big winners I hit on have put me ahead of the market as a whole in the last 4 years. I was out of the market for a while before that.

Sure, it was partly luck, but stock fundamentals matter a lot, imho.

27   missing   ignore (1)   2017 Mar 1, 3:58pm     ↓ dislike (0)   quote   flag      

What is your total return using this strategy, counting the years you were out of the market as well?

I think people who pick stocks either take too much risk, or keep a lot in cash (the ocational wins cannot compensate the loss of oppotrinity), or create a portfolio with a lot of stocks. The last mitigates the first two problems, but doing diligent research on a lot of stocks is too time consuming and they end up underperforming the market, just like most active portfolio manages do.


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